Councils will be able to improve services despite suffering another round of dramatic spending cuts this week, Conservative Chairman Grant Shapps has insisted.

He warned authorities to prepare for a cut of ten per cent in funding from central government, on top of the 26 per cent cut imposed since 2010.

But Mr Shapps said that making do with less money had encouraged local authorities to consider “thoughtful and creative” ways of improving services.

The Tory Cabinet Minister was speaking the Birmingham Post in the run up to the Government’s spending review, to be launched by Chancellor George Osborne.

He highlighted plans to pour money into infrastructure projects such as roads, rail lines and bridges.

And he said the economy had “turned a page” as the danger of complete financial collapse had passed and the Government could now concentrating on driving growth.

In total, the Chancellor is expected to announced £11.5 billion in spending reductions over four years, with councils losing ten per cent of the funding they receive centrally, on top of the cuts already imposed.

Birmingham City Council approved plans for spending cuts of £102 million in February, and has announced it is to review leisure services in the city to deal with a £3 million overspend.

Changes could include closing services or inviting private firms to take them over.

Speaking at Westminster, Mr Shapps said: “When we said we would reduce the budgets by 26 per cent over four years, we were told that councils would be going bust by this stage of the Parliament.

“I know that not a single council has gone bust by this stage.

“A lot of that is a credit to them because they have managed to cut their cloth far more wisely, or to find efficiencies.”

Councils had improved the way they delivered services, he said.

“And I think you could say the same of lots of areas of public life like the police, who have managed on smaller budgets but cut crime as well.

“Do I think local councils are at the end of the road of efficiencies? No I don’t. There are still plenty of efficiencies that can be enacted.”

Authorities could do more to provide services jointly with neighbouring councils and share senior staff with their neighbours, he said.

“Satisfaction levels show that people are more satisfied rather than less satisfied with their council compared to three years ago.

“Who would have thought that was possible, with budget cuts?

“So I think they can do another ten per cent. I think they’ll have to be very thoughtful about it and creative in terms of reforming their services.”

Mr Osborne will also announce billions of pounds of new spending on infrastructure, with fuller details to be released on Thursday.

A multi-billion, six-year infrastructure investment programme to be launched by Danny Alexander, the chief secretary to the Treasury, will include building tens of thousands of extra affordable homes as well as upgrading the A14, a new Mersey Gateway bridge in the northwest, and the first tranche of work on the HS2 high-speed railway.

Details of the Single Local Growth Fund which will be devolved to Local Enterprise Partnerships will also be revealed this week.

Mr Shapps said the Government had been forced to focus on controlling public spending in order to prevent complete collapse of the public finances as seen in Greece and elsewhere, but it could now spend more on major infrastructure schemes.

“The spending review will demonstrate that we are moving from the rescue stage to the recovery stage. We have turned a page.

“Yes, we are having to live with reductions in expenditure for longer than we would have liked.

“But it’s important that we finish the job that has been started of rebalancing the economy which includes helping to create 1.3 million jobs in the private sector, having fewer people working for the government because it’s been unaffordable.

“And what people are going to see is that we can rebalance or refocus our resources away from day-to-day spending and into infrastructure.”